The Universities Superannuation Scheme (USS) will channel £100 million (€123 million) into a 25-year financing deal with South East Water, a UK water utility, that will provide inflation-linked returns.
The pension scheme's investment management subsidiary provided the financing via private placement of an index linked note.
USS recently enlarged its infrastructure investment team by hiring two managers. At the time, Mike Powell, head of alternative assets, said the hires reflected “USS's intention to be a significant and successful direct investor within this asset class”.
Infrastructure investment is seen as an appealing option for pension schemes because it can offer long-term returns that are linked to inflation.
“Our team has spent a significant amount of time building strong relationships with a select number of core UK infrastructure companies,” says Gavin Merchant, senior investment manager for infrastructure at USS. “Our approach is very much focused on forming long term partnerships where we can provide flexible financing.”
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